Liberals Impose Conservative Carbon Tax

In spite of provincial resistance, Trudeau’s carbon tax takes effect on January 1, 2019. Finally, Canada’s government has taken a serious step towards someday reversing the negative effects of human-caused climate change. The United Nation’s intergovernmental panel on climate change recently emphasized the need for drastic action to reduce carbon pollution.

While Canada’s carbon pricing regime is long overdue, it may inspire similar action in other nations eager to halt rising temperatures, glacier melt and extreme weather. The plan’s stated aim is to encourage climate-friendly consumption and investment, thereby gradually reducing Canada’s share of global carbon pollution. Unfortunately, it is difficult to reconcile this intent with the fact that Canadian oil and gas exploration costs are exempted from the new plan.

The federal carbon tax is actually a two part pricing system composed of a federal fuel tax and a federal or provincial pollution tax that targets industries like Alberta’s oil sands. The industrial pollution tax starts at $20 per tonne and will increase by $10 per year until 2022. Interestingly, the Alberta government has accepted the plan for now, in spite of its traditional hostility to any federal regulation of its natural resource sector, especially the oil sands. Leaving the collection of industrial pollution taxes to individual provinces and territories is clever politics. However, this practice creates the possibility of inconsistent enforcement, especially when new governments are elected.

British Columbia, Alberta, Quebec, Newfoundland, Nova Scotia, Prince Edward Island and the Northwest Territories all have an industrial pollution plans that meet federal standards so these governments will handle their own pollution tax revenues. Nova Scotia employs the controversial “cap and trade” model where polluters buy credits from other industries whose carbon emissions are lower.

The federal pollution tax applies to Ontario, Saskatchewan, New Brunswick, Manitoba, Yukon and Nunavut since they don't currently have climate pricing plans that satisfy federal standards. However, residents of those provinces still benefit from the fuel charge aspect of the carbon tax. The Liberals have promised to return 90 per cent of new federal fuel taxes to residents of these provinces. The other 10 percent of the fuel tax will fund Indigenous communities, municipalities, non-profit groups and social programs. Residents of smaller communities and rural zones will receive an additional 10 per cent since these areas will not pay the federal fuel tax until April 2019. In Nunavut and the Yukon, plan applies after July, 2019.

Conservative leader Andrew Scheer and others have mocked the carbon tax as a Liberal election gimmick. Perhaps it is time for parliamentarians to set aside their adversarial reflexes to join forces in choosing the common good of humanity rather than short term political gain. Unfortunately, the partisan nature of our parliamentary culture has created widespread confusion about the core beliefs of Canada’s political parties and the people who lead them.

Scheer claims to support the reduction of global emissions rather than targeting Canadian carbon pollution. This both minimizes Canada’s problem and the potential value of the nation’s role in global solutions. The world will ignore Canadian climate rhetoric unless it is supported by serious action. While U.S. and Asian carbon pollution dwarfs Canada’s, Scheer’s attitude may embolden those who deny the link between negative climate change and human behavior.

While the federal Conservatives and others reject this “job killing carbon tax”, such regulation has long been quietly advocated by those who understand the dangerous potential of an unrestricted free market. Scheer’s remarks ignore noted right-wing economists who have long recommended government regulation and taxation as a disincentive to environmental harms like pollution. Therefore, concerning the carbon tax at least, Justin Trudeau is acting in a more conservative fashion than Sheer or even former Prime Minister Stephen Harper, known for his government’s generous subsidies and tax breaks to the energy industry, classic welfare state policy.

The economics of climate change is a perfect example of how political parties flexibly adopt or reject ideas in the pursuit of power, especially notions that fit their ideological stance. Fortunately for the planet, a literally-free market has never been suffered to exist. Since human beings are not always logical, state intervention is still required if our species is to survive its pursuit of rational self-interest.